Intel beats targets for fourth quarter

SAN FRANCISCO (CBS.MW) -- Intel Corp. said fourth-quarter net income dipped slightly, even as earnings per share topped analyst forecasts and revenue rose 13 percent on better-than-expected sales of its computer chips.

Net income for the period ended Dec. 25 was $2.12 billion, down 2 percent from $2.17 billion for the same period a year ago. Earnings per share were 33 cents, unchanged from the fourth quarter of 2003, as Intel reduced the number of its shares outstanding through a stock buyback program.

Revenue rose to $9.6 billion from $8.7 billion a year earlier. Analysts were expecting earnings of 31 cents a share on revenue of $9.4 billion, according to consensus estimates from Thomson First Call.

Intel's semiconductors are used in more than 80 percent of the world's PC's and laptops, and the company benefited as consumers bought more computers during the quarter. The world's largest chipmaker also cut its inventory more than expected as it worked off a product glut that hurt its results in prior quarters.

Based on the revenue number, "PC demand was a little bit stronger than people thought," said Jeremy Lopez, an analyst with the research firm Morningstar.

Intel issued a sales forecast for the first quarter that was in line with analysts' estimates, cheering investors.

For the first quarter of 2005, Intel forecast sales would be in the range of $8.8 billion and $9.4 billion - in line with analysts' consensus target of $8.9 billion. Gross margins for the quarter are expected to be about 55 percent.